Like many businesses, AMC Theaters has taken a huge hit in the wake of the coronavirus pandemic. Theater closures throughout the better part of the year had the chain reporting major losses throughout each quarter. Now, the nation’s largest theater chain says it expects its cash to be gone by the end of this year or early next. AMC’s second-quarter overall loss was $561.2 million, compared to last year’s profit of $49.4 million.
AMC says it “believes its cash burn to date is in line with the Prior Update. However, given the reduced movie slate for the fourth quarter, in the absence of significant increases in attendance from current levels or incremental sources of liquidity, at the existing cash burn rate, the Company anticipates that existing cash resources would be largely depleted by the end of 2020 or early 2021. Thereafter, to meet its obligations as they become due, the Company will require additional sources of liquidity or increases in attendance levels. The required amounts of additional liquidity are expected to be material.”
Earlier this summer, AMC raised close to $40 million by selling shares and announced a major debt restructuring plan as well, but so far it hasn’t been enough to solve all the theater chain’s financial problems.
The spiraling events of 2020 have caused a chain reaction for theaters, beginning with shelter in place orders that closed theater doors around the globe. Then production shutdowns delayed yet-to-be-released movies leaving AMC and others with basically no films to show once reopening was possible. Many production companies decided to release their films via streaming instead, like Disney’s Mulan which ultimately opted to debut on Disney+ after multiple theater delays. Now Disney has also moved Soul from its late November theatrical release to head straight to the streaming service as well.
Now that AMC has started reopening theaters, it has to fund the cost of operation regardless of whether it attracts moviegoers or not, which is ultimately more expensive than just leaving the theaters shut down.